Fueling the economy

Rising oil prices are buoying Saudi’s economy, and the hydrocarbon sector is expected to resume hiring this year thanks to improved forecasts, according to a recent survey conducted by the Kingdom’s National Commercial Bank (NCB) along with Dun & Bradstreet South Asia Middle East. The bank’s quarterly Business Optimism Index showed that 46 percent of the firms surveyed plan to invest in business expansion during the first quarter of this year.

Liquidity is also expected to increase this year, with 35 percent of the respondents saying that borrowing conditions are set to improve in first quarter of this year, the bank said.

“There is an overall optimism in the Saudi private sector at the beginning of this year compared with third and fourth quarters of last year, and this optimism among companies will help them to increase their investments,” said al-Shaikh, NCB’s senior vice president and chief economist.

The bank expects Saudi’s GDP to grow by 3.5 percent this year as it exports more oil, al-Shaikh told Bloomberg in an interview. The country is planning to increase oil production by 150,000 barrels, and NCB forecast oil prices to reach $75 per barrel on average this year, he said.

A Bloomberg survey in February found that most members of the Organization of Petroleum Exporting Countries (Opec) increased crude-oil production in February this year, with Saudi leading the increase.

Opec announced a production cut of 4.2 million barrels a day in January 2009 as oil demand fell across the world because of the global financial crisis. The group did not change the targets during a meeting in December last year.